BrainTrust Query: Private Brand Evolution
Through a special arrangement,
presented here for discussion is a summary of a current article from the newmarketbuilders
terminology for retailer-owned brands has evolved over the years, as have the
brands’ premises and promises. Many in the retail industry stopped
at "private label" and still use that term as a catch-all, even as
retailers have deliberately evolved out of it. To retailers, however, it’s
not just wordplay, and "private label" and even "private brand" no
longer fully describe the options they intend to exercise.
The term "private
label" in particular feels anachronistic at a
time when better-than-national-brand formulations and packaging upgrades are
the price of entry (and by-the-way, not necessarily at entry-level prices)
and as direct-to-retail deals such as Cost Plus’ recent partnership with
Bed Bath & Beyond
and Sears’ groundbreaking decision to sell Craftsman tools in Ace Hardware
It’s the latter examples that mark a major branding shift
been over thirty years in the making — an evolutionary leap that has retailer
brands not just diversifying within controlled environments, but migrating,
monetizing and multiplying. We’re calling these new brand beasts "prolifics"
and we expect them to roam Earth and ether for many years to come.
Loblaw’s arguably started all this back in the ’90s
when it first made its President’s Choice private label available to
U.S. retailers. Since then, many other international retailers such as the
Boots and Spain’s Mango have done the same, the former selling its products
in Target’s beauty department and the latter opening shop-in-shops within
J.C. Penney. There were different ways of expanding their U.S. footprints without
hanging lots of shingles.
Another example is Safeway, which in 2008 formed
the Better Living Brands Alliance with the mission to "provide health
and wellness food and beverage solutions via two proven multi-category brands." In
2009, the company began selling its two brands, O Organics and Eating Right,
to other retailers including Price Chopper, Hy-Vee and, this year, Brookshire
Brothers. O Organics has surpassed $400 million in annual sales, making it
a top-selling organic brand. If turning former competitors into customers smacks
a bit of sleeping with the enemy, what a lucrative enemy it is!
effects are hard to gauge, but what undoubtedly will happen is that certain
retailers will prefer working with one another and will form solid connections.
Because of some retailers’ enormous influence, distribution
networks and scale, the brands they take "prolific" will become even more formidable
competitors to national brands and indelible in shoppers’ minds.
What’s the likelihood that “prolific” branding — selling house brands to other retailers — will become much more pervasive over the next few years? How do you think the trend will reshape the dynamics between national and store brands?